> If you enter a trade in the “wrong direction”, you’re much more likely to get a fill than if you are in the right direction. Takers (ie. most retail investor

> If you enter a trade in the “wrong direction”, you’re much more likely to get a fill than if you are in the right direction. Takers (ie. most retail investors) always fill. Makers create an order book, defining a buy (say $101) and a sell price (say $99), along with a spread in-between ($101-$99 = $2). If you buy a stock at a price the maker offered, you will be guaranteed to get it; the maker has no say in that transaction (they can't reject it anymore after the taker accepted). If you do the math carefully, you'll see that both strategies "letting losers run" and "cutting winners short" fascinatingly have a neutral EV (ignoring fees and spread). You just take a lot of unnecessary risk/variance, but it all averages to zero. (Even the strategy "I just go all-in until I am bankrupt" has a zero EV after any finite number of iterations, because the exponentially unlikely chance of you winning every single time comes with exponential payoff.) The fundamental principle behind this is that takers buy at market prices (ignoring fees and spread), and that those market prices are in an equilibrium. If it were possible to easily lose money by buying at market prices, then billion-dollar hedge funds would've already shifted the market prices by simply doing the reverse, before the retail trader would have any chance to trade on it.